Why do so many famous and wealthy people go broke?

On behalf of Reisinger Booth & Associates, P.C., L.L.O. posted in probate and estate on Wednesday, December 26, 2018.

It's hard to believe that one of the most prolific actors in Hollywood for decades -- Johnny Depp -- is broke, but revelations from several lawsuits make it appear that's exactly what has happened.

Depp is hardly alone among famous people who have amassed large fortunes only to see their money one day vanish. People from all walks of life - from former presidents (like Ulysses S. Grant) to famous writers (like Mark Twain) have made -- and lost -- fortunes during their lifetimes.

Sometimes, celebrities become victims of fraud and theft -- other times, they're the victims of their own bad investments or spending habits. Most of the time, proper estate planning and the use of trusts could have helped them avoid a lot of their financial woes.

Estate planning is not just about making sure that your assets are protected when you die -- it's also about making sure that your assets are protected when you're alive and unable to manage them properly yourself. Trusts offer people a valuable tool for wealth preservation -- if they're wise enough to take the opportunity.

Trusts allow you to create a legal divide between the ownership of your funds and your ability to enjoy their benefits. Some trusts can be revoked, while others generally can't be changed once they are established. These irrevocable trusts usually offer the most financial protection from creditors. Since you cease to be the owner of the funds, creditors usually can't go after them.

Asset protection trusts of this nature include Medicaid planning trusts, special needs trusts, family bank trusts and domestic asset protection trusts, among others. There are numerous vehicles available that can help you protect your wealth from other people's bad intentions and your own fallible instincts. It's just a matter of sitting down with the right attorney and discussing your goals in order to learn more about your available options.

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